Why do we need life insurance?
The principle of insurance is based on the concept of risk, that is, the risk of potential danger inherent in a situation or activity. Its financial consequences, whether they are related to property or people.
Life Insurance is an important financial tool. It can help you live life with fewer worries knowing you’ll receive financial assistance after a disaster or accident, helping you recover faster.
From danger to accident
The danger is the prelude to risk, which is itself the prelude to the accident. Thus, the threat having been identified, the risk becomes perfectly describable, it is likely to occur, but we do not know if it will happen and when it will occur.
Insurance is a contract: in return for the payment of a contribution, also called a premium, the insurer guarantees specific services to an individual, an association or a company in the event of a risk identified in the contract.
The concept of risk is critical in insurance; it is a random event feared by an insured for its financial consequences. The hazard is based on three criteria:
- the future: you cannot ensure a car accident that has already happened;
- uncertainty: we cannot provide a particular risk that will materialize on a known date;
- involuntary: we cannot guarantee the damage that the insured person causes or causes himself voluntarily.
Different types of insurance
Damage insurance
Damage insurance covers both liability insurance (family civil liability, driver’s civil liability, professional liability, etc.) and property insurance (insurance for movable and immovable property, damage to the vehicle, etc.).
The traditional vocation of insurance is to allow the replacement of damaged or stolen goods. In addition, today, liability insurance in domestic life, professional activity, automobile traffic and leisure has grown considerably. In this case, insurance is taken out against any damage and possible prejudice caused unintentionally to third parties.
The purpose of property and liability insurance is to protect the assets of the insured. Some of them are grouped in “multi-risk” contracts (multi-risk home, multi-risk business, etc.).
The most common property insurance is fire insurance, theft insurance, water damage or broken glass, but other types of events are automatically included (natural disasters, attacks, etc.) or offered as an option.
Personal insurance
Personal insurance covers the risks inherent in human life and offers a complete set of solutions adapted to each situation. Some contracts provide for benefits in the event of physical injury: death, invalidity (insurance in the event of death), others allow the creation of savings and the payment of this in the form of an annuity or capital if the insured person is alive at the end of the contract (life insurance).
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A little history
The emergence of insurance is a recent phenomenon. In France, it only dates from the end of the old regime, with the founding of the General Insurance Company and big adventures in 1686, even if from the XIV century Italian merchants had found a way to protect their ships against losses suffered during a shipwreck or following the misdeeds of pirates. They created associations to constitute funds liable to compensate them (Amalfi code).
The development of insurance is linked to economic and social transformations: the transition from an agricultural economy to a diversified economy has multiplied the causes of damage (industry, commerce). The concentration of populations in cities with new homes and new ways of life has engendered new plagues.
Why is life insurance so important to women?
Life insurance can protect your family’s future financial security, whether you are a single mother or a primary breadwinner. Here’s how.
Did you know that the share of family income attributable to women is more significant than ever? According to Statistics Canada, in 2015, they were the primary maintainer of more than 40% of households. A proportion which was only 17.4% in 1976.
Thanks to this development, the importance of life insurance are growing. Put; life insurance can provide financial protection for your family in the event of premature death. Let’s see how important it is and how it can be of use to you.
Women’s life insurance needs
Losing your income could cut family income by more than half. It can significantly affect the quality of life. Ask yourself: Could your family be able to support themselves financially without your help? Would she be able to pay the rent or the groceries if you were no longer there?
On the other hand, good life insurance coverage provides a cushion to cover the expenses of day-to-day living. It is a way to protect your family from want should something happen to you.
Life insurance for single mothers
Are you raising your children alone, or are you the primary breadwinner? Even more important is life insurance.
Taking out life insurance that your children are beneficiaries of help protect their future financial security. How? ‘Or’ What? As beneficiaries, your children will be entitled to a tax-free death benefit (also known as a death benefit) if you die.
What is a death benefit? It is the amount of money the beneficiary receives upon the death of the life insurance holder. (The exact amount of this benefit depends on your insurance contract and the coverage you purchased.) Your beneficiaries then have this money to pay, for example:
- the debts;
- mortgage payments or rent;
- scholarship fees;
- funeral expenses;
- other current expenses.
It is also possible to ensure the support payments you receive for your children or yourself. It would give you protection if something were to happen to your ex-spouse.
Life insurance, a plus for caregivers
It is a fact; women contribute to households far beyond the financial aspect.
In addition to their work, women often take on most caregiving – children, spouses or elderly relatives.
Women spend an average of 14 hours per week looking after children. It compares to 10 hours for men. And women are more likely to provide more than 20 hours of care per week.
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Given the unequal distribution of care and ensuring continuity, purchasing life insurance becomes even more crucial. Nothing will replace your care, but life insurance can help pay for child care, nursing or home help. It helps your loved ones to continue to receive the support they need if something happens to you.
How to choose the right type of life insurance
When it comes to life insurance, there is no one-size-fits-all solution. Your income, debt level, and day-to-day expenses – including additional costs like home care – all influence the amount of insurance you need.
- Try this Life Insurance Calculator to estimate the coverage that might be right for you.
You will also need to determine what type of insurance will best meet your needs. For example, maybe you want protection for a fixed period until your children finish their studies?
In such a case, you might consider taking out term life insurance. Or, maybe you want lifetime protection, which is what most permanent life insurance products provide.
You can also ask your advisor for help in choosing. An advisor can also show you other insurance options, such as disability insurance or critical illness insurance. Depending on your situation, several insurance policies may be necessary to help protect your family’s future.
How long does the pricing process take?
Your insurance claim can be approved within hours or days. But it can also take you several weeks or months. It all depends on several factors, including the type of life insurance policy you want.
How to get a lower life insurance premium?
Some risk factors don’t change, like age or family history. Others, however, may vary:
- A balanced diet and regular exercise have both financial and physical benefits. Healthy people who lead healthy lifestyles tend to pay lower life insurance premiums. It is because being overweight can increase your risk for certain diseases (diabetes or heart disease). The closer you get to your healthy weight, the lower your premiums will be.
- You can increase your chances of getting a better price by adopting a healthier lifestyle. For example, you could moderate your alcohol intake and try to quit smoking. Even driving safely can have an impact.
Is pricing still essential?
Not always. Insurance policies that do not require underwriting are sometimes referred to as “guaranteed establishment” insurance. They can be a wise choice if you are in poor health. But if you are in good health, it will be easier for you to purchase insurance that requires underwriting. Spend a little time in this process (and sometimes a little of your blood!), And you could save a lot of money.
How to apply for life insurance?
The ideal life insurance for you will vary depending on your circumstances, your needs and your goals. To find out more, consider speaking to a professional, such as one of our advisors. An advisor can help you choose the type of insurance that meets your needs by studying your situation. They can then continue to help you through the application and pricing process.
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